Starting a business without joining a company? First look at startup guarantee loans: up to 300,000 RMB per individual, with the government covering half the interest

16. Starting a business without joining a company? First look at startup guarantee loans: up to 300,000 RMB per individual, with the government covering half the interest

Cost: There’s no fee for consulting. You’ll need to visit the local civil affairs bureau once for eligibility screening, then visit both the guarantee agency and the lending bank once each. The lending bank is the same institution that provides the loan. The main challenge is that borrowed money must ultimately be repaid.

In plain terms: If you absolutely must borrow money to get started, this government‑backed loan is a good option. Each applicant can receive up to 300,000 RMB for a maximum term of three years, with the state paying half of the interest. One often‑overlooked requirement is that at the time of application neither you nor your spouse may have any other outstanding loans — except student loans, micro‑credit for poverty‑alleviation recipients, mortgage or auto loans, and consumer loans under 50,000 RMB.

Benefit: The eligibility criteria for individuals are outlined in Article 6 of the “Administrative Measures for Special Funds for Inclusive Financial Development” (Caizheng Jinrong [2023] No. 75). The first condition is that the applicant belongs to a priority employment group. These groups include registered urban unemployed persons, people facing employment difficulties (including persons with disabilities), veterans, ex‑convicts, college graduates (including village officials and returnees from overseas study), workers laid off from industries undergoing overcapacity reduction, as well as migrant workers returning to start businesses, online entrepreneurs, poverty‑alleviation recipients, and rural self‑employed farmers. The second condition is the absence of other loans: “Apart from student loans, micro‑credit for poverty‑alleviation recipients, mortgage loans, auto loans, and consumer loans under 50,000 RMB (including credit‑card balances), the applicant and his/her spouse must have no other outstanding loans at the time of application.” Article 9 states that for qualifying loans the government subsidizes 50 % of the actual interest rate; this subsidy is not granted for loans that are extended or fall into default. Article 10 removes the requirement for collateral when the loan amount is 100,000 RMB or less, meaning no additional guarantor or property pledge is needed. Article 11 limits the maximum loan size to 300,000 RMB for individuals, extendable to 110 % of that total for partnerships. The permissible interest ceiling varies by region: LPR + 50 basis points in eastern areas, LPR + 150 basis points in central and western regions, and LPR + 250 basis points in poverty‑stricken areas. LPR is the benchmark lending rate published by banks, while one basis point equals 0.01 % of the rate. Applicants who repay diligently, generate many jobs, and run promising projects may apply up to three times. Finally, Article 12 permits provincial governments to broaden eligibility, raise loan limits, and increase the subsidy rate as needed.

Evidence grade: A

Sources: Ministry of Finance (2023). Notice on the issuance of the "Measures for the Management of Special Funds for Inclusive Financial Development" (Caijin [2023] No. 75, Articles 6, 8, 9, 10, 11, 12). <https://www.gov.cn/zhengce/zhengceku/202309/content_6903691.htm>

Notes: Even though the government covers half of the interest, the loan must still be repaid. Our book’s stance in Section 12, Item 1 remains unchanged: only risk‑acceptable capital should be used for entrepreneurship; do not tap personal savings or sign personal guarantees for corporate loans, and your spouse should avoid doing so as well. This provision simply indicates that, if you decide to borrow, this government loan offers the lowest possible interest rate — avoid consumer loans and informal lenders. Exact limits and eligibility may differ by province; always check the latest rules issued by your local civil affairs bureau. The temporary 2020 directive allowing up to 200,000 RMB per applicant has been superseded by the current measures. For details on registering a sole proprietorship or corporation, obtaining permits, tax filing, and winding down a business, refer to Section 12. Information on training subsidies, social‑insurance assistance, and internship programs for the unemployed can be found in Section 7, Item 13 (Vocational Training Subsidies).